Product Development 2.0

Dion Hinchcliffe writes: “What is Product Development 2.0 exactly? It’s an informal term I’m applying to something that online startups and traditional businesses both are increasingly doing: leveraging of mass user contributions, providing open architectures for others to build on as they like, and even handing control over key product decisions directly to users. The reasoning behind doing this is simple: Satisfied customers have always been essential to having the most successful business, both online and offline. But how best can you ensure that they get exactly what they want from you, as customized and quickly as possible? This is where the scale, new tools, and business models of Web 2.0 have stepped in, giving us the potential to provide our customers with better, rich products, much more quickly, and with more of what they want. Taken as a whole, it’s increasingly clear that there are new business models afoot that are just now being well understood.”

Intentional Programming

The New York Times writes:

Charles Simonyi, the chief executive of Intentional Software, a start-up in Bellevue, Wash., … wants to overthrow conventional coding for something he calls intentional programming, in which programmers would talk to machines as little as possible. Instead, they would concentrate on capturing the intentions of computer users.

The method begins with the intentions of the people inside an organization who know what a program should do. Mr. Simonyi calls these people domain experts, and he expects them to work with programmers to list all the concepts the software must possess.

The concepts are then translated into a higher-level representation of the softwares functions called the domain code, using a tool called the domain workbench.

iPod and Musicphones

Tomi Ahonen suggests that the reign of the iPod is over.

A massive 309 million musicphones were sold in 2006 (you read it right, today musicphones outsell iPods at almost 7 to one!). And those who say “but they don’t consume music on phones” – wrong. Several global studies now prove that the vast majority of musicphone owners listen to – and buy – music to – their phones. The game is totally, utterly, irreversably, permanently over. The iPod is a niche product today with rapidly diminishing market share. The mass market belongs to the phones. That is why last week Apple was forced into announcing the iPhone, inspite of not even owning the iPhone name.

Google as our Internet

Robert Cringely writes:

Google intends to take over most of the functions of existing fixed networks in our lives, notably telephone and cable television.

The Internet as we know it is a shell game, with ISPs building their profits primarily on how many users they can have practically share the same Internet connection. Based on the idea that most users aren’t on the net at the same time and even when they are online they are mainly between keystrokes and doing little or nothing when viewed on a per-millisecond basis, ISPs typically leverage the Internet bandwidth they have purchased by a factor of at least 20X and sometimes as much as 100X, which means that DSL line or cable modem that you think is delivering multi-megabits per second is really only guaranteeing you as much bandwidth as you could get with most dial-up accounts.

This bandwidth leveraging hasn’t been a problem to date, but it is about to become a huge problem as we all embrace Internet video. When we are all grabbing one to two hours of high-quality video per day off the net, there is no way the current network infrastructure will support that level of use. At that point we can accept that the Internet can’t do what we are asking it to do OR we can find a way to make the Internet do what we are asking it to do. Enter Google and its many, many regional data centers to fill this gap.

In a follow-on post, Cringely writes that the only way to compete is through P2P networks.

if there is going to be an alternative to Google, that will have to be us, too.

It’s pretty simple, really. As more and more video hits the web, ISPs will find themselves crushed by demand that will drive up their backbone costs until all profit is driven from their businesses. Google will come to the rescue with regional data centers that will peer with local ISPs and relieve them of much of that burden, allowing the ISPs to actually cut back their backbone connections and run fewer servers, though at the cost of losing the big movie studio and TV network business deals those ISPs currently think will eventually make them rich. If we look at what Google will be offering, it is bandwidth and server power. So to compete with Google will require bandwidth and server power.

Mobile Social Networking and GPS

WSJ writes:

Many young people are obsessed with two things: social networking and their mobile phones. Companies have been trying to cash in on combining them, but up until now, nobody has found an approach that has really caught on. News Corp.’s MySpace and Facebook Inc. recently launched offerings that help people connect to their Web sites from their phones but the services don’t allow users to do much more than they could do online.

Now, GPS technology is adding a new dimension to wireless social-networking services, letting cellphone users find each others’ locations — just as GPS-equipped phones are becoming more prevalent, partly in response to federal rules that require carriers to make it easier for emergency officials to locate cellphone users. An estimated 63% of mobile phones sold in North America in 2007 will have GPS or assisted GPS functions, up from 55% of phones sold in 2006, according to market researcher Gartner Research.

TECH TALK: When Bad Things Happen: Vanishing Website

I remember another incident in late 1996. The company hosting our IndiaWorld website suddenly decided to shut down our servers. Some demands were made, which I could not obviously meet. I was stunned. I could see my entire business collapsing in front of me. Without our flagship website, what would we do? For an entire day, I sat still and nearly motionless. All I could see was Failure written all over. Given that this was not the first time I was failing in a business, I began to question myself and my abilities. I descended into a spiral of negative thinking.

It was then that my wife suggested that I do what many others do when they are in trouble: Pray. Until that time, I was not much of a believer in God. I would do the periodic obligatory visits to temples without much feeling. Not seeing much of a choice in the situation (and being one of those who believe that the Wife is Always Right), I went and prayed. A rational mind still refuses to believe what happened thereafter. But within a day, things started looking up. While we lost our domain, it was not all dark and bleak. VSNL helped me host our servers in India. NCST (yes, the same institution which had terminated my Internet connection just over a year ago) moved quickly to give us the indiaworld.co.in domain. And we were up and running again in a matter of 24 hours. We had to rebuild our customer base from scratch, but at least we had the website running now.

There are a couple of lessons to be drawn from this. Faith in God is one of them. To this day, I make it a point to visit the temple daily. I cannot and do not want to make a causal link, but there are some things best left unanswered. The other lesson I learnt is that an entrepreneurs Passion can create Friends. As I sat in front of the GM at VSNL, all I could convey is my vision and passion. He believed in what I was doing and ensured that we would get all the help we needed to get our service operational. At that time, VSNL did not even have a formal policy on hosting and pricing. Different people helped us en route as we tried to rebuild the business click by click.

Tomorrow: Seeing The Good

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Netflix’s Movie Streaming

The New York Times writes about Netflix’s new service:

Netflix has rewritten the rules this time, of the online movie-rental game. The company has done away with expiration dates, copy protection and multi-megabyte downloads. Thats because you dont actually download any of Netflixs movies; instead, they stream in real time from the Internet to your computer. (This advantage comes with a key disadvantage: you must be connected to the Internet. Wireless hot spots at airports and hotels are fair game, but movies cant be carried around on a laptop.)

Netflix has also done away with per-movie fees in fact, there are no additional fees for watching movies online at all. Instead, the Netflix service is free if youre already a Netflix DVD-by-mail subscriber. When you log in to Netflix.com, you see a new tab called Watch Now. It opens what looks like a duplicate set of the companys usual excellent movie-finding and movie-recommending tools, except that you now see two buttons beneath each movies icon: Rent and Play.

Internet Success

Nisan Gabbay writes: “The near overnight success of companies such as YouTube, Facebook, Flickr and Digg has motivated a slew of us into believing that we too can create the next big thing on the Internet. But does your idea truly have the potential to attract millions of monthly unique visitors in less than two years time? To create a high traffic consumer Internet service in under two years, the company must exhibit one of two characteristics. It must either be a true viral marketing candidate (likely a communication service at its core) or it must be a strong candidate for leveraging natural search traffic.”

Google Mobile

Greg Clayman speculates about what Google may do next in the mobile space:

picture a device that knows where you are, knows what you want, is seamlessly integrated with your newsreader, your email, your calendar, and your documents. Its searches are contextually relevant and it browses faster than other devices as top sites are optimized and cached away somewhere in the Googlecloud. The pieces all exist today and are deployed in one way or another. This new project with Orange looks to me like a way to get them all together and deeply integrate them with the handset.

By why stop at there? Remember when Google CEO Eric Schmidt said, your mobile phone should be free, at the Web 2.0 conference last month? And recall that Google is actively trying to build free municipal WiFi networks? Now imagine the device described above isnt a phone provided by a carrier at all but a Sidekick-like mobile media WiFi device: ad-supported, location aware, chock full of apps, and free to use. I think its a comin. What do you think?

TECH TALK: When Bad Things Happen: Connection Cut

Thursdays event took me down memory lane. In June 1995, a few months after I had launched IndiaWorld, our Internet connection was cut-off by NCST. We were told then that we were using it for commercial purposes. It did not matter that many others were doing so they were too powerful to touch! All of a sudden, the cost and complexity for uploading content (and software) to the servers in the US rose exponentially. What used to be a 10-minute automated process costing tens of rupees a day became a multi-hour, manual process (involving dialing international to an ISP in the US) costing hundreds of rupees a day.

But we did not give up. The termination only made our resolve stronger. We were determined to ensure that services would continue uninterrupted it whatever the other pains. This continued for a few months till commercial Internet services were officially launched in India in August 1995. No prizes for guessing who got one of the first Internet connections!

At that time, I tried talking to various people who had the Authority to do something. I spoke with Nasscom (we were a member). No assistance. We were obviously too small and irrelevant to matter. I spoke to tried to speak to one of the Government secretaries responsible for technology, only to be told that he was busy watching television. I wrote to various people who I felt could help. Not one responded. It was then that I learnt my first lesson: Entrepreneurs have to fight their battles on their own. When you are small, you dont matter contrary to all the spiel that one may hear. That incident has also given me a healthy disrespect for people in Power and Authority and a firm belief that we have to rely on ourselves to fight, and hopefully, win.

It is these periods that test ones character. It is easy to give up or give in. Or use alternate unclean means to achieve ones ends. It is tempting to sell ones soul. But if one can stick it out, one emerges stronger from these storms. And that is the second lesson of Bad Things: There is an End. No bad situation lasts forever. One has to wade through troubled waters to get to the other wide. Look at it as a sort of Agni-Parkisha there is only a finite amount of Agni!

When one is going through the Bad Thing, it is very hard to think straight or believe that it will be over soon. The days seem long and never-ending. But one has to maintain calm and composure. As the ships captain, the entrepreneur cannot give up hope. Optimism is the most important quality that needs to be exuded during these difficult times especially for everyone around.

Tomorrow: Vanishing Website

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Online Communities

Stephen Johnston writes: “I’d suggest that the natural evolution of things seems to be taking us down the Long Tail – more niche communities created to align with existing real world communities. And I’d doubt whether any of the existing mass networks are the place to start for this. For example, I’d love to have a more powerful online community component to my sailing club, but it’s unlikely that any one of these networks will have critical mass in these real world communities to be feasibe (MySpace is not big in Suffolk). The real-world community itself will determine the technology connectedness of its members, and 99% of real world communities have no internet presence. So, presumably there’s a viable business opportunity for a multi-platform community-service provider offering community services to these communities.”

Web 2.0 Challenges

David Beisel writes:

web companies who are attempting to leverage network effects to drive sustainable long term value are having difficulty because of the volume of companies launching places a strain on the available pool of true early adopters willing to try a service. The loud echo-chamber marketplace makes it extremely difficult now (vs. two years ago) to rise about the noise to spread the word in the blogosphere or other natural communications forums applicable to the target market.

As a consequence, consumer web services are being forced to attract customers outside this ecosystem. While Ive seen some entrepreneurs with successes in utilizing offline marketing to incite behavior online, my experience has shown that the best way to get people do something online is while their online after all, theyre already there. I think that as some Web 2.0 shakeout emerges over the coming months, well see a trend that the ones which endure beyond the initial flash are those which have incorporated the marketing of the service directly into the service itself.

Mobile Web Workshop

From the executive summary of the W3C Workshop on the Mobile Web in Developing Countries which took place last year in December in Bangalore:

As of today, the most appropriate way to provide such e-services on mobile phones is with SMS-based applications. The reasons for that are numerous :

* Easy to use (everybody knows how to send an SMS)
* Low and predictable cost (no cost for receiving a message, low and known cost for sending a message)
* Availability on all phones

Of course, there is a general agreement on the limitations of such applications :

* Low capabilities (text-only, limited size, basic services like single query – answer, …)
* Interoperability problems between operators

Adopting the Web as the platform for developing future services requires work on these blocking factors which have been identified :

* Problems of availability of Web browser. There is no web browser on low-end phones. Some of older phones have WAP browsers, and when available, it is used, but there is a lack of WAP content. It is not clear, particularly from handset manufacturers, that this situation will change in a near future. Indeed, organization like GSMA are not integrating in the specification of their Emerging Market Handset the need of having a web browser.
* Problems of configuration : the difficulty to configure a phone to enable web browsing, compared to the immediate accessibility of SMS is seen as a blocking point.
* User Interface: usage of mobile Web browser are still problematic : entering URI, …
* Cost : given the price and the unpredictability of the cost of data services, people are scared to use Web browser without knowing how much they will be charged. Participants acknowledged that the availability of affordable flat-rates plans for data-services would be a key factor for adoption.

RevolutionHealth

WSJ writes:

Steve Case, who brought the Internet into millions of homes and then ushered America Online through an ill-conceived merger with Time Warner, is wagering tens of millions of dollars that consumers will eventually pay about $100 a year to subscribe to premium services on his Web site. He believes that as Americans are forced to bear more of the cost of their health insurance they’ll want a site that digitally stores their medical records and provides telephone services that coaches them about their health, matches them with doctors and helps them unsnarl insurance claims.

In launching RevolutionHealth.com, Mr. Case says he aims to transform a “broken industry by putting health care back into the hands of the consumer.” Skeptics, however, say his site — which will start off free, but eventually begin charging for premium services — may have trouble surviving, much less achieving Mr. Case’s goal of remaking the health-care system.

TECH TALK: When Bad Things Happen: Thursday Tale

Last Thursday, an Indian telecom operator inexplicably and without warning to us cut off our connection on the grounds (as we were told later) that we were causing harm to their revenue streams. For now, the details are not important. Suddenly, a service we had live become inaccessible to a large number of people. We had no Plan B. We were caught off-guard. We had given only passing thought to such an eventuality and here was reality staring at us in the face. It was a difficult day compounded by the fact that we were going into a long weekend and if services were not restored by end of the day, we would be facing a long period of downtime.

As I sat through making phone calls trying to understand what had happened, and what our options were, my mind went back to a number of such events that I had experienced over the past twelve years as an entrepreneur. Bad things happen. Even if one is trying to do good! Most entrepreneurs are too optimistic to think about these eventualities and tend not to have any fallback options. They assume that everyone plays fair.

It was a long and difficult day. I had come in with a set of things to do and a few people to meet. All of that went out of the window as the day progressed and the crisis showed no sign of abating. My cabin became a sort of war room as we tried to figure out how to get back our status quo. I talked to a few friends and well-wishers trying to get their inputs. Within the office, a few of us debated various alternatives. It is amazing how a Bad Thing can get the adrenalin flowing.

Amidst all this, I tried to keep calm. I had seen this before. Every Bad Event has an End. In this case, I wasnt sure when that would come. Time was running out for us. And, almost as suddenly as our service was blocked, it was restored later in the day. We were glad about it, but still left searching for answers. Would it happen again? Was this a planned move to shake us? Or warn us? Or show us who the Big Boss was? Plenty of questions, but few answers as I write this out.

My intention in discussing this is not to talk about what we did wrong. That is a separate story. The point is to discuss, from an entrepreneurs perspective, how one needs to be prepared for Bad Things. These will happen thats a given. And they will happen when one is least expecting it. How should Bad Things be handled, and how can they be metamorphosed into Good Endings?

Tomorrow: Connection Cut

Meeting David Cowan

I met with David Cowan of Bessemer Venture Partners recently. David had this to say on his blog: “The highlight of my week was meeting Rajesh Jain, founder of India World (the high-value acquisition that served as poster child of India’s internet bubble). Rajesh is the Bill Gross of India, prolifically founding, funding or running startup after startup (get a sense for his metablosim and creativity on his blog). Among his more ambitious projects are a thin client service that promies to deliver India’s households with computer, bandwidth and software for $10 per month.”

Thanks for the gracious praise, David. Was a pleasure meeting with you, too!

Founders and Managers

Union Square Ventures writes about what they look for in investee companies:

First and foremost, we look for people who we will enjoy working with. Weve been investing in early stage technology businesses for over 20 years and weve backed people we like and weve backed people we ended up having great difficulty with. Weve made the decision that no matter how attractive an investment opportunity may be, we will not get involved if we do not think there is a high likelihood of a very positive working experience. That is partially a recognition that the entrepreneur/VC relationship is critical to the success of the company. But it also a recognition that if we enjoy working with a person or a group of people, it is more likely that others will as well.

We also seek to back entrepreneurs and managers that weve worked with successfully before. We realize that this sets up a club relationship where its hard to break in. And we also realize that some of the best entrepreneurs will be first time entrepreneurs. So we have a process to make sure we back first time entrepreneurs, but the hurdles are simply higher.